Finance Ministry still chasing funds in hopes of paying farmers

Ministry hoping to secure some loans to cover Bt90 bn owed

The Finance Ministry is still trying to secure some kind of loans for the rice-pledging scheme in the hope farmers will be paid this month, the government said.

Caretaker Deputy Finance Minister Tanusak Lekuthai said the ministry’s Public Debt Management Office (PDMO) was attempting to secure loans to cover the payments, and if it were successful, Bt90 billion owed to farmers would be paid this month.

“After the Songkran holiday, the PDMO has tried to put out calls for loans,” Tanusak said.

“More than 30 financial institutions are ready to help but are afraid to lend because of concerns over problems like those that happened to the Government Savings Bank and Krungthai Bank.”

In response to a proposal from farmers that an extra Bt40 billion be borrowed from the central budget, Tanusak said it was a good idea but ultimately it would be up to the Election Committee and the Cabinet to decide. And even if that is approved, there is still another Bt50 billion needed.

“The ministry is urgently seeking sources of the needed Bt90 billion. Any agencies or organisations that have has hindered financial institutions’ lending to the ministry are asked to provide ways that will enable them to speed up payment to farmers.”

After the House of Representatives was dissolved late last year, placing the government in a caretaker role, it was unable to raise funds to pay farmers what they had been promised under the pledging scheme. It asked the banks to bid on a loan agreement to pay off the farmers, but there were no takers.

Before the House was dissolved, the farmers were paid by the Bank for Agriculture and Agricultural Cooperatives (BAAC), which was supposed to be reimbursed by the Commerce Ministry’s sales of rice it had taken from the farmers under the pledging programme. The ministry has continued raising money by selling its rice stockpiles, but has come up short, and some farmers are months behind in their payments.

“We could not borrow [through normal channels in the government’s caretaker role]. That’s why the Finance Ministry tried to find other means of borrowing, but it reached a dead end because of financial institutions’ concerns,” he said.

Commenting on a proposal for the BAAC to issue bonds without a ministry guarantee as a way to pay farmers, Tanusak said the process of assigning credit ratings to such bonds would take no less than four months, resulting in a further delay for farmers.

On allegations that the pledging scheme has been plagued by corruption, he said farmers were innocent victims of that particular controversy.

“If there is has been suspicious activity involving any procedure of the rice pledging, a petition should be made targeting that suspect procedure – not payments to farmers. The payments do not involve corruption.”

Rice pledging involves four steps.

First, a farmer is registered through the Ministry of Agriculture and Agricultural Cooperatives.

Second, rice pledging is run by the Commerce Ministry’s Public Warehouse Organisation and Marketing Organisation for Farmers. Third, payments to farmers based on a rice-pledging document are issued by the BAAC.

Last, the Commerce Ministry sells the rice.

Tanusak said the third procedure was the most transparent and there was no indication of corruption given that payments went straight into farmers’ accounts.

The Finance Ministry is still trying to secure some kind of loans for the rice-pledging scheme in the hope farmers will be paid this month, the government said.

Caretaker Deputy Finance Minister Tanusak Lekuthai said the ministry’s Public Debt Management Office (PDMO) was attempting to secure loans to cover the payments, and if it were successful, Bt90 billion owed to farmers would be paid this month.

“After the Songkran holiday, the PDMO has tried to put out calls for loans,” Tanusak said.

“More than 30 financial institutions are ready to help but are afraid to lend because of concerns over problems like those that happened to the Government Savings Bank and Krungthai Bank.”

In response to a proposal from farmers that an extra Bt40 billion be borrowed from the central budget, Tanusak said it was a good idea but ultimately it would be up to the Election Committee and the Cabinet to decide. And even if that is approved, there is still another Bt50 billion needed.

“The ministry is urgently seeking sources of the needed Bt90 billion. Any agencies or organisations that have has hindered financial institutions’ lending to the ministry are asked to provide ways that will enable them to speed up payment to farmers.”

After the House of Representatives was dissolved late last year, placing the government in a caretaker role, it was unable to raise funds to pay farmers what they had been promised under the pledging scheme. It asked the banks to bid on a loan agreement to pay off the farmers, but there were no takers.

Before the House was dissolved, the farmers were paid by the Bank for Agriculture and Agricultural Cooperatives (BAAC), which was supposed to be reimbursed by the Commerce Ministry’s sales of rice it had taken from the farmers under the pledging programme. The ministry has continued raising money by selling its rice stockpiles, but has come up short, and some farmers are months behind in their payments.

“We could not borrow [through normal channels in the government’s caretaker role]. That’s why the Finance Ministry tried to find other means of borrowing, but it reached a dead end because of financial institutions’ concerns,” he said.

Commenting on a proposal for the BAAC to issue bonds without a ministry guarantee as a way to pay farmers, Tanusak said the process of assigning credit ratings to such bonds would take no less than four months, resulting in a further delay for farmers.

On allegations that the pledging scheme has been plagued by corruption, he said farmers were innocent victims of that particular controversy.

“If there is has been suspicious activity involving any procedure of the rice pledging, a petition should be made targeting that suspect procedure – not payments to farmers. The payments do not involve corruption.”

Rice pledging involves four steps.

First, a farmer is registered through the Ministry of Agriculture and Agricultural Cooperatives.

Second, rice pledging is run by the Commerce Ministry’s Public Warehouse Organisation and Marketing Organisation for Farmers. Third, payments to farmers based on a rice-pledging document are issued by the BAAC.

Last, the Commerce Ministry sells the rice.

Tanusak said the third procedure was the most transparent and there was no indication of corruption given that payments went straight into farmers’ accounts.